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HomeIn-House InsightsRules of engagement

Rules of engagement

Gang Xu, director and associate general counsel of Walmart (China) Investment Co Ltd, tells us what qualities he looks for when recruiting staff and appointing external counsel



Asian-Counsel: How did your career lead you to your current role with Walmart (China) Investment Co Ltd? What is the nature and scope of your role?
Gang Xu: While I was an associate with Morrison & Foerster LLP (MoFo), I worked with other lawyers from its China offices in 2002 on a deal to set up Walmart (China) Investment Co Ltd as a holding company (Walmart China) and began to take notes of its developments, but had no idea that one day I would work inside the company. Then for almost eight years from 2002 to 2009, I focused on solving legal issues related to the preparation, operation and final winding-up of the 2008 Beijing Olympics and Paralympics. I was vice chair of MoFo’s executive committee on the Olympics project, ran the daily operations of a team of lawyers from MoFo’s multiple international offices, spent a lot of time in Beijing at BOCOG (Beijing Organizing Committee for Olympic Games), worked side-by-side with many talented in-house lawyers at BOCOG and IOC (International Olympic Committee), and learned from them what is expected from an in-house role. During the same period of time, Walmart China had accelerated its growth in China and needed someone with both a strong legal background and leadership skills to help China General Counsel run the 40-people strong legal department, so I took the opportunity and joined Walmart China as its director and associate general counsel in February 2010. I currently work in a wide range of areas including M&A, tax and finance, e-commerce, retail services, labour, compliance and ethics, litigation, and real estate lease or development.

AC: What is the nature of the relationship between Walmart China’s in-house function and the business?
GX: The in-house team is a partner with the business side, often taking on responsibility for complex issues with significant legal and commercial implications. At the same time, it is a guardian of the company since it also plays important roles in compliance and ethics.

AC: What are the biggest obstacles faced in your role, and on a broader level by your in-house team?
GX: The biggest obstacle is recruiting, keeping, nurturing and motivating talents in our in-house team, which is a common number one issue among the US business community in China, as shown by a recent survey conducted by the US-China Business Council. Our senior management is keenly aware of this issue and has devoted many resources in this area, and as a result our in-house team has made the greatest progress in associates’ engagement scores in 2010 among all Walmart China functions.

AC: What qualities does Walmart China look for in external counsel? Are there any criteria followed in choosing suitable practitioners?
GX: Walmart operates on the basis of “everyday low cost” (EDLC), so we always have a tight legal budget and demand value from our outside legal advisors. First, we value firms that understand our corporate culture, by which I mean compliance. For example, their lawyers should have high ethical standards and will not violate FCPA (Foreign Corrupt Practices Act) requirements; for another example, firms’ partners and associates must be willing to fly on economy class, and stay at three-star hotels, which is our company’s travel policy.

Secondly, we value firms that can provide high-quality legal advice on a consistent basis. For example, one major firm once sent us a memo which was reviewed by our business side who found a lack of depth and sophistication, so we decided to switch to another firm. We are loyal to firms that can produce quality work products.

Thirdly, we value firms that are flexible with their billing arrangements to be cost competitive. Depending on the nature and requirement of the project, the billing arrangements could be fixed fee, discounted hourly rate, volume discount, or down payment with success fees.

Fourthly, we value firms – big or small, international or domestic – that show core strength or expertise in certain areas, such as local law knowledge, cross-border tax planning, real estate, antitrust, or social insurance.

Fifth, we value firms and lawyers that can communicate in English directly with our senior regional or global management, if requested, and at the same time be sensitive enough to our internal process.

Finally, we value firms that can provide free continuing legal education (CLE) training to our in-house staff, for example through presentations to our in-house and business side on major legal developments, regular newsletters on legal topics, or organisation of joint training programs with us.

These are my “Six Cs” rules of engaging outside counsels: cultural fit, consistency, cost-competitiveness, core strength, communication and CLE. This is just my personal summary, and should not be regarded as Walmart’s official position.

AC: How is the value and cost of Walmart China’s in-house team measured?
GX:
Our in-house team is measured by their speed of response to the business needs, the practicality of their legal advice and the risks mitigated. These are factors critical to satisfaction in the eyes of our customers.

AC: When hiring for your in-house team, which candidate qualities would be of most value?
GX:
In addition to qualities such as integrity and competency, I am looking for people with passion for their work. The position is not just another job for a candidate, but should “light the fire within”, if I may borrow the motto from the Salt Lake City Winter Olympic Games.

AC: How has the in-house team responded to any issues or challenges that have arisen for Walmart China in recent years?
GX:
Our in-house team has risen to the challenges of the fast-paced and ever-changing business environment in China and is developing a strong bench in support of Walmart China’s growth strategy. Substantial time and efforts were spent in the Trustmart acquisition and integration in recent years, and we hired five lawyers in 2010 to strengthen our team. AC

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